Jul 19, 2012

It was probably the most ballyhooed congressional hearing on defense for the year. As the monthly economic news continues to show poor job growth, and as the elections heat up, the Republican chairman of the House Armed Services Committee, Buck McKeon, and defense contractor Lockheed-Martin saw a major opportunity to protect the Pentagon budget and their bottom line. On Wednesday, just as the House of Representatives was about to debate the 2013 Department of Defense Appropriations bill, McKeon held a big hearing with Lockheed and other industry representatives to explain why the American economy could not possibly stomach the $55 billion in defense cuts set to occur in January, as required by last summer's Budget Control Act and the failure of the congressional "Super Committee" to cut a broad budget deal.

To heighten fear of the so-called "sequester," McKeon and Lockheed have been arguing that an obscurepiece of legislation called the Worker Adjustment and Retraining Notification (WARN) Act requires contractors to send out notices of impending pink slips to tens, if not hundreds, of thousands of defense industry workers. And because of what they maintain is the WARN Act's 60-day advance-notice requirement, those warnings would come just a few days before the November elections. The only possible rescue from the predictable panic among politicians, especially Democrats, would be to undo the $55 billion in automatic cuts to the defense budget and save the jobs. Or that's been the idea.

But leaving nothing to chance, the day before the hearing, the defense manufacturers trotted out yet another study arguing that the sequester would cost over a million jobs in defense and related work; former Vice President Richard Cheney was brought into Washington to chime in on how destructive the Pentagon budget cuts would be; Lockheed's testimony was leaked to the Washington Post to produce an article published the morning of the hearing to soften up any reluctant politicians; and pressconferencesabounded.

All the usual hot rhetoric was rebroadcast in excess. To supplement Secretary of Defense Leon Panetta's memorable description of the sequester scenario as "doomsday," the president of the manufacturer's mouthpiece, the Aerospace Industries Association's Marion Blakey, called the alleged impending lay-offs "Armageddon." Describing his own hearing as "probably one of the most important hearings I can remember," McKeon chimed in with "catastrophic" (another Panetta term) and termed the Obama administration's purported lack of concern about this looming event a "cavernous silence."

I fully expected that these crude tactics would be effective and that the Democrats at the hearing would be stampeded into clamoring for the sequester to be repealed with little to no concession from the Republicans.

I was quite wrong: From the McKeon/Lockheed perspective, the hearing was a complete bust.

The Democrats on the committee didn't buy any of what McKeon and the manufacturers were putting down; actually, they made the hearing into an embarrassment to McKeon and his industry sidekicks, as McKeon's deflated and underwhelming comments at the end of the hearing made painfully clear. Instead of badgering his Democratic colleagues into submission, the chairman was left making excuses for the corporations' planned exploitation of their own employees, saying they were "just trying to run their businesses in an orderly manner."

Despite repeated prompting, the Lockheed witness, CEO Robert Stevens, could not identify a single contract that would be terminated, nor specify the number of workers that would be laid off. All he really had was more rhetoric: "devastating," "undermining the aerospace industrial base," and then "catastrophic" and "meat axe," again borrowed from Panetta.Even though he did not know what contracts would actually be affected or how, he nevertheless insisted that he would need to send out those thousands and thousands of pink slip warnings just before the elections.

Another major witness, EADS North America CEO Sean O'Keefe, was not even sure of that. The closest he got to warning of pink slip notices was saying that EADS "will have to do something." He was clearly not entirely on board with Lockheed and McKeon. The president of Pratt and Whitney, David Hess, was even less helpful; he didn't really know what the law requires or what he would do; it was all "not clear." A small-business contractor, Della Williams, president of Williams-Pyro in Fort Worth, Texas, volunteered that her company was "not covered" by the WARN Act. Not exactly the clarion call McKeon and Lockheed wanted to broadcast.

They were lucky no one asked them about the schedule the WARN Act actually requires or the number of jobs that the $55 billion sequester might actually take out of defense production. Some sharp reporting by Bloomberg and some skeptical analysis by a former OMB official at Washington's Stimson Center have cast serious doubt on both the concocted requirement to send pink slip warnings just before the elections and about the real number of jobs that $55 billion less in Pentagon spending next year would incur. The Bloomberg story explained that the notices, when required, would not be called for until well after the elections, and Gordon Adams at Stimson made clear that the job numbers in question were wantonly inflated by including thousands upon thousands of employees who do no defense work.

Nor did the witnesses get to what the budget sequester would actually mean to the Pentagon, if it occurs. According to the Congressional Budget Office (CBO), it would reduce Department of Defense "base" spending, not including additional war spending, to $469 billion. That amount, also according to CBO, would return the Pentagon to the 2006 level of spending, adjusted for inflation. In historic terms, Pentagon spending would therefore remain about $35 billion above its average Cold War level, and it would stay as much as $100 billion above the low points that followed previous high spending periods, such as the Korean and Vietnam wars and the Reagan era. Finally, it should be noted, the level of spending, not including additional war spending, would still be more than twice the combined defense budgets of China, Russia, Syria, North Korea, and Iran.

There are problems with the sequester. The cuts would be abrupt, and -- according to some -- they might have to occur automatically across various selected accounts, perhaps even individual programs. But those are not the elements that the plaintiffs are primarily concerned about. They are concerned about the amount of money -- and the truth is the amount left by the sequester is historically generous. But to McKeon, Cheney, Lockheed, Panetta, and the other hysterics, these data mean nothing. Unfortunately for them, the chasm between their rhetoric and the facts has become so gigantic that people in Washington are actually beginning to notice.

Comments

Funny, when jobs are eliminated in other areas of government - teachers, police, firefighters, social workers - they are REAL jobs as far as Congress in concerned. Seems like only defense contract jobs are REAL ones. Odd, isn't it?

This offers the perfect rationale to cut back on the bloated use of overpriced contractors by the Pentagon and to control the incredible waste and duplication that has warped the Pentagon budget. It will also provide an opportunity to scrap the F-35, a program plagued with structural and safety problems.

When I started in aerospace as a new-hire right out of college the CEO of the major aerospace company I worked for made about 10 times what I made. Now that I am toward the other end of my career the CEO of the aerogiant I work for makes nearly 400 times what I make. Plus, the pencil neck, bean counter I work for now is an abject moron not fit to carry that earlier CEO's slide rule.

Today, July 20, 2012, marks 43 years since the Eagle landed at Tranquility Base in 1969. 43 years later we do not have a single rocket that can launch a man into space, let alone land them on the moon. We're lucky if we can get a man supersonic in an airplane. We certainly don't have any of those left that can routinely fly at Mach 3+. Obviously we're better off having defense contractors design our rockets than we were were NASA designed them, because if we weren't, the defense contractors, who are making record profits, would have told you so. Obviously we're better off paying defense contractors $1.10 for every $1.00 they spend designing our aircraft than we were when they funded their own aircraft development programs, because if we weren't, the defense contractors, who are making record profits, would have told you so. The Farnborough airshow was a bust this year, maybe for the last time. Once a showcase of the might of the free world's military's, this year all the significant new aircraft belonged the Russians and Chinese who didn't attend.

Meanwhile the military industrial complex schills walk that propaganda tight-rope. They want you to be afraid. They want you to be afraid enough to keep dumping your tax dollars down their rat hole, but don't get so worked up that you demand change. Don't get so worked up that you start wondering what is happening to all that money they are wasting. Don't get so worked up that you want to know spending above Cold War levels now just barely sustains a military industrial complex that once thrived a much lower levels of spending. Just throw money at the problem.

do these people in the p.r. dept's of defense contractors not have a shred of integrity? their stock values that have gone through the roof, they have executive compensation packages that are second to none all the while regular americans have lost their homes and in some cases their children to these wars...

Note that coverage of the hearings was weak and almost thoughtless--just passing through what the witnesses and members had to say. In the Post, Times, and WSJ and even NJ the accounts did not balance with other views that contradicted the hyper talk in the hearing room. Some of these reporters just take dictation and don't do more than pass through information as if they believed it all.